Big buyouts now good news to investors

Investors typically get nervous when companies announce big plans to buy another company. But this year, investors are viewing these mega-deals as a net positive.

Shares of the seven publicly traded companies to announce one of the biggest of 10 merger or acquisition deals this year are up 2.3% on average, according to a USA TODAY review of merger data from Dealogic. It’s a complete reversal from the long-time trend of the shares of acquiring companies to fall after announcing a big deal, as explored in academic research.

That’s not to say investors are cheering on every deal. Shares of AT&T are down 71 cents, or 1.9%, to $36.03 Monday following the telecom giant’s bid for satellite TV operator DirecTV. Shares of Comcast, too, fell the day after its bid for Time Warner Cable.

Reactions to the biggest deals announced this year by publicly traded companies:

Acquirer

Target

Bid announced

Stock day of announcement

Zimmer

Biomet

4/24/2014

11.5%

Valeant Pharmaceuticals

Allergan

4/22/2014

7.7%

Actavis

Forest Laboratories

2/18/2014

5.0%

Facebook

What’sApp

2/19/2014

1.1%

AT&T

DirecTV

5/19/2014

-1.8%

Exelon

Pepco

4/30/2014

-3.2%

Comcast

Time Warner Cable

2/13/2014

-4.1%

Source: S&P Capital IQ

And investors’ reaction to the deals are much more positive when it comes to the targets. Shares of the seven publicly traded targets in the year’s biggest 10 deals are up, on average, 7.9%.